There’s a whole lot of tools we have at our disposal which didn’t even exist a few years ago. From a business perspective many of them present a counter intuitive option to the ‘Harvard Industrial Complex’. Yes, those established principals of what we thought we already knew about what worked in the market.
Trust the crowd to co-design our product? Are you crazy?
Get funding from future customers with out giving equity? How we going to do that?
Share revenue with content creating customers? Don’t be silly let’s keep it all for ourselves.
Co-opt with our competitors to grow the entire ecosystem? No way, let’s grow our market share instead.
Launch products with lower margin than those they’ll cannibalise? It’s uneconomic and stupid.
When the world changes, what once seemed ridiculous quickly becomes rational. Startups are now redefining what can work in a world driven by cheap and even disposable technology. It turns out having access to the new tools is not enough, we also need access to a new mindset.
Startup culture is becoming a big thing in the wider community. It’s seemingly graduated from a high tech nerdy subculture into a mainstream pop culture giant overnight. But is it really anything new? Or is it just a rebranding of small business as we knew it with some terrific superlatives and rockstar billionaire game winners to give us that Bruce Springsteen stadium rock ethic? Certainly the technology revolution we are all living through is significant. Significant enough to make it easier than it has ever been in history to start a business.
Net result is that startup culture hot. Just like grunge music was in the early 1990’s. Anyone with a pair of ripped jeans in a dive bar was in a band. And now anyone with a wifi connection and a laptop is launching a startup. The simplest way to remind ourselves that everything is a remix is to kick it old school and see how our new startup words stack up:
- Pivot – used to be called adapting to the market.
- Iteration – used to be called a product improvement.
- MVP – used to be a prototype or a test market.
- Growth Hackers – used to be what marketers and sales people were called.
- Truth North -used to be known as the single minded proposition.
- Runway – used to be known as the bank balance and how long we had left before going bust.
- Burn Rate – used to be a sign that this new business venture wasn’t going so well.
- Lean – used to be called doing things on a budget. (Oh, The pyramids were the first lean startup….. those pyramids were meant to be big square blocks but they ran out of materials, and just went with the pyramids instead – turned out to be a killer feature.)
If you’re reading this and you currently work for a company you don’t have an equity stake in – I reckon there’s a pretty good chance you’re planning your cubicle escape route. Today I wrote a post for Pollenizer on my Top 10 things employees need to know before they jump ship. The thing about entrepreneurship is that it is a change in environment. And like all new environments we enter the biggest challenges we face are never intellectual, but cultural.
You can read it here.
I’m betting that everyone reading this blog, either works in a business they helped build, or is planning to escape their corporate cubicle some time real soon. And the people who are planning exit from the big nasty industrial conglomerate they work for, are planning, most often – build a corporation. (Sounds a lot uglier than the word ‘startup’ – doesn’t it?)
Ok, so the irony is clear.
But the way to overcome the irony is to remember why we left our job / company in the first instance. It probably wasn’t because we weren’t earning a decent income. It probably wasn’t because our standard of living was too low. It probably wasn’t because working conditions were unsafe. No, it was about the culture, the excessive administration, the frustrations, the lack of creative input and the dehumanising elements which so often ensconce a large corporate environment. And so here’s what we need to remember:
If we succeed in building our own version of a ‘corporation’ people like us will someday come and work inside it. They too have the same desires and requirements in order to enjoy their work day. They too, will hope to leave someday and make their own version of a corporation. Given all of this, it’s best we remember not to create the thing we ran away from.
I’ve been reviewing my notepad from 2013 and thought I’d share my insights into what’s changed and the big issues from my perspective in startups, business and technology.
Technology is no longer a thing: It’s almost not worth mentioning now it is so ensconced in human life. Business, political and social activities are intertwined in technology as an organism. Having a digital strategy is a bit like having an ‘electricity strategy’ – it’s just nonsense. In fact, if any business still delineates a part of their strategy as digital, then it’s fair to say they have no strategy at all. A terrific piece of evidence for this fact is observing how the technology and business section of the WSJ and New York Times now have a massive overlap.
Social media just is: It’s becoming a bit like general chit chat between any group of friends. A way of communicating. It doesn’t have a nuance or specificity that makes it remarkable anymore. It just is. I guess it’s now just a stage in the evolution of human communication. We could regard this as evidence of its permanence.
Anonymity is the new black: You may remember in the early commercial web era – post 1993, we all had alias names and emails before we felt comfortable enough to convert to our actual human self on line. It seems now that anonymity is back. People wanting to express themselves without it impacting their college application or next job interview. It’s been said that this helped tumblr, and is a large part of Snapchats appeal. As privacy gets eroded through government activity we can expect a lot more anonymous forums to emerge as powerful web platforms. Another outcome is the potentiality for privacy to become a serious luxury going forward.
Email & text on the comeback trail: The inbox has made a comeback for me. This year I signed up to a number of email newsletters which provided a haven of curation in my areas of interest. It might also be that my email address is mine, where social media has the who owns this data issue hanging over it. I also reverted to more text / SMS activity which would’ve been the only domain for my social media a couple of years ago. I think this was facilitated by improved video and photo output of smart phones, the direct & personal nature of people we share with phone to phone. Also the up weighting of data allowances on mobile phone from carriers.
Device equilibrium: All devices are merging to a kind of functionality equilibrium. Phablet anyone? It does seem as though all tech devices can perform much the same function. Now the only differentiator is size preference and UX.
Still waiting for wearables: It feels like we are in early 2000’s phase for smart phones when it comes to wearable computing. We all know we want it, we all know it is inevitable, but no one has quite nailed the technology output yet. Google Glass is the clear front runner, but no one has launched anything yet which has captured the ‘iPhone’ this changes everything moment. Here’s hoping for 2014.
We of things: See above – insert web of things.
The geo layer: Doesn’t seem to me like it can be a point of difference for any web related startup or brand. Foursqaure and others may have missed their chance. It’s a lot like digital now and just exists as an invisible layer on all our output. A vital component to making sense in a technology world, but omnipresent simple and expected.
Long reads: The deminishing returns of news and immediate communication are helping long thoughtful analysis make a comeback. The startup Medium.com seems exciting and longer posts which consider the implications of rapid change are capturing more of my time these days.
Tech valuations & bubblenomics: Crazy company valuations continue to astound. We are absolutely in another technology bubble, this time it is a valuation bubble, rather than an investment boom. I was talking with Nic Hodges about the $3 billion+ valuation of Pinterest proposing that they are like a shopping centre of sorts – a Westfield maybe? His retort was classic. He said:
Westfield owns $20 billion worth of property. What Pinterest owns is some code.
It seems that everyone forgets that valuations must be a function of earnings, or expected future earnings. Here’s a question worth asking when it comes to the true worth of any company. What would you rather own:
Apple stock at a 14 times price earnings ratio?
Facebook at a 141 times price earnings ratio?
Do you really think Facebook will be 10 times more profitable than it is now or any time soon? Or that Snapchat with an infinity price earnings ratio (zero earnings on $3.2b valuation) will ever make serious money? There is a very big difference between usage utility and commercial value.
There’s a reason why Warren Buffet has been in the top 2 richest people in the world for the past 30 years – he knows what companies are actually worth. And there’s a reason why many famous VC’s are rich – they are selling you sausages at caviar prices. It seems the real money in technology stocks is made when the founders exit, not when investors buy it.
So – what did you guys notice in 2013?
In what seems like a century ago I built and launched one of the first peer to peer websites – rentoid.com
In order to build the site, I outsourced the coding on a site called oDesk. This site and others of its ilk are a great entrepreneurial equaliser – for they reduce the barriers to entry. Not just in terms of price for the services, but also by allowing non techies gain access to techie services. They also allow eco systems to flourish across international borders. But they have an added benefit… a real benefit which isn’t spoken about all that often.
They facilitate an important cultural exchange.
Meet Vasilii Racovitsa – Pictured below – sharing a meal with me in my home. Doesn’t seem like such a big deal…
… Until you know that I first met Vasilii via oDesk as a freelanc web developer back in 2007. And that Vasilii was born during the cold war in the old USSR in a province called Moldova. [Moldova is now an independent country] While the relationship with Vasilii started as a commercial one, it is much more than that now. In fact, it has been much more than that for many years… he is a dear friend and business confidant for whom I want family and financial success as much as I want it for myself. But I just met him in real life for the first time last week.
Besides the fact that he made my first web play rentoid.com come to life, he also taught me more about technology than anyone else. The truth is that the lower labour rates in Eastern Europe allowed me to arbitrage my way into techie / startup land. But most people falsely believe that lower labour rates in developing economies are a one way street. The the people in developed economies are the only beneficiaries, and that we ‘take advantage’ of those in less developed markets. In truth we’ve both benefitted dramatically. Through my local connections Vasilii now generates more that 50% of his business from Melbourne, a mere 14,854km from Moldova. Which is why he is here. He is here on a large project totally independent of me. A project which dwarfs anything he ever did for me. But it was facilitated through the network I was introduced him to. What’s more interesting is that his business employs more people in Moldova than rentoid ever did here in Melbourne. And his development team now work in every form of coding / language / mobile dev you can think of.
Since he’s been here, it is like hanging out with a long lost relative. He’s just like the guy I used to speak to every day on skype… Which is a great reminder that the on-line and real world should only ever be pre-ambles to each other – seamlessly interchangeable.
I’m keen to introduce him to everyone in our local startup community who likes to meet amazing, smart, helpful people. In the time and multiple projects I’ve worked with him on, he has never once gone over budget and always delivered to spec. Put simply, he keeps his promises.
This week I’ve shipped him into the abode of big Scott Kilmartin, who he has also done some work for. But if you’re keen to offer:
“a bed for beta”
“divan for development”
“a cot for code”
“a hammock for HTML”
…or a simple welcome to someone from our global community, then just let me know.
While the tools this digital revolution have provided us are amazing, it’s the connection to our world that we should be truely thankful for.
The of two important cultural phenomenons got me thinking about office culture again. The love of coffee and the love of the internet. Both have a massive stake in western world office culture. Most people engaged in anything from small to large companies have omnipresent access to both. But the perception of each is vastly different.
But as far as I can tell the following is true:
Coffee: If you are at the coffee machine, making a coffee or buying one at the local espresso house in the morning no one looks twice. In fact it is respected and expected, part of the culture. A simple coffee fix is fair play in an office environment. Regardless of the fact that it is during work hours.
Internet: If you are surfing the web (excluding facebook) and potentially reading an article within your industry scope it looks bad. People see it as avoiding work or wasting time. It’s evident that this belief exists by the number of ‘click outs’ people do as others walk by. When in reality, this is a vital part of being effective and up to date.
What they both point to is the importance of culture. Both the macro societal one and the internal one. I’m starting to believe that culture is at the apex of company output. And the culture we foster determine the people we attract and the output we create. One thing I know for sure, is that in a rapidly changing business landscape I’d rather have an informed set of staff working for me, than a set of robots who are operating on the punch clock paradigm.
When the personal computing era started to thrive in the mid 1970’s it was juxtaposed against a strong anti-corporate counter culture. Many hippies saw computers as tools of oppression designed, built and used by large corporations. But there was another angle, another truth about the invention of this technology, and pretty much every other technology. If the technology has enough utility and importance it will eventually end up in the hands of the people. And if we are luck the invention will eventually be used to disrupt the bad parts of the world that invented it. And so crossover groups and communities like the Homebrew Computer Club emerged to fill that void. It happened with the PC and most forms of digital technology, where the people are now the major beneficiary as major legacy corporations scramble to survive.
For this type of thing to happen we don’t need more inventors, what we need is more innovators. Innovation is about taking an idea or concept and executing it. Making it usable. Introducing it in a way that makes it both accessible and desirable. Technology only really becomes valuable when it is distributed and omnipresent. If we want to create value through a startup or any business for that matter our focus should be on allowing people to easily ride on our vehicle, not the vehicle itself.
As I write this I am siting in an airport lounge and thinking about how much work I have got done, simply because I have not been interrupted by meetings.
But let me start by saying there is nothing more powerful than people sharing ideas when done right, the problem is that most meetings are what I call ‘Public Reading Scenarios’. That is people aggregating in the same room so that someone will read to them, something they could read in their own time, or more often the case, is totally irrelevant and no meeting is needed.
So I started doing this weird exercise every time I happen to be in a meeting filled with people. What I do is this:
- I count the number of people on the meeting.
- I decide what I think the average salary in the room is.
- I work out the hourly rate of the average salary.
- Add this to the number of hours the meeting goes for
- Work out the cost of meeting in wages
Last week I was in a meeting with 22 people. I calculated the average salary as $150k per annum, which then translated into an hourly rate of $75. The meeting went for 5 hours. The cost of this meeting was then $8250. I don’t care how big or wealthy the companies involved are, this is a lot of money. What makes it more significant is that most meetings are pointless – as this one was.
This meeting in particular was what I call a ‘Public Reading Event’. There was now real exchange of ideas, debate or in depth discussion. Rather a few people stood in front of copy heavy power point slides and read it out to the people sitting around eating muffins and pretending to listen. A total waste of time and the $8250. This is before we add to the price the opportunity cost of real work that wasn’t done during the 5 hours, or the cost of the meeting ‘culture’ it creates. And we all know a strong ‘meeting culture’ results in a vortex of indecision and slow business practice.
No point raising the issue without proposing a solution. So here is mine.
We add a widget to every email / meeting / calendar organiser which does my calculation above and estimates the ‘Cost of the meeting’. So when the meeting request is sent through the organiser and the participants see the cost in time – which is the real cost. It would say something like – estimated cost of meeting $3000. If people have to travel it should calculate that cost as well. This will make people think twice before they send the meeting request. It will also make us think twice before we accept the request. We measure the cost of most things in a company, but for some reason we rarely measure the cost of employees time in ‘salary employee’ environments, which is ironic when they usually represent 20-50% of the cost of running most companies. The widget is a pretty simple idea that could be mashed into any calendar function. Maybe it’s an iPhone calendar app that someone ought build?
When a meeting does occur and we agree it is worth while and attend, there would be a pretty strong emphasis on the value that occurred during it. I’m certain that ‘Public Reading Events’ would be a rare experience indeed.
So the only question remaining is which nimble app startup firm is going to build this?